Friday, July 16, 2010

Businesses Leaving California

A list of companies moving out of or expanding outside California has grown by 84 since the start of the year, says Joe Vranich, Irvine consultant who specializes in relocating companies...

The 84 in six months of 2010 compares to 44 in all of 2009 and 35 from 2006 through 2008, he says, adding that the moves represent $4.7 billion in capital shifted out of California.

“The exodus of capital and jobs has reached such an alarming point that California ought to declare a state of economic emergency just as we have emergencies resulting from floods, fires and earthquakes,” Vranich says. “Raising taxes or creating new regulations should be out of the question.”

He has long insisted that most of the moves are related to California’s “high taxes, undue regulations, excessive fines and fees, high workers’ comp (insurance) costs, a legal environment stacked against businesses and lengthy permitting requirements.”

8 comments:

I would think that we would see businesses leaving Illinois and Michagan as well. How ironic that Boeing chose Chicago over Dallas for their corporate headquarters. At some level I bet they wish they had that decision to make again.

Arguably, the state of California's main source of income is the weather, terrain, and relative lack of mosquitoes. Very, very few large companies would be left in the state if it weren't for the nice conditions.

And Boeing and Chicago are a perfect fit. Boeing doesn't actually *do* anything other than executive management in Chicago, so they aren't at much risk from union demands, NIMBYism, etc. there. Additionally, should the city attempt to bleed them dry, they have the money and capability to move somewhere else. The real problem comes if you're doing something in Chicago that requires a large workforce and specialized facilities like a lot of hard-to-relocate machinery.

Blaming Prop 13 for anything is idiotic, anyway . . . it allowed for increases in property value assessments to keep up with inflation, starting with valuations before the initial boom in the several years prior to its passage;every time ownership changed hands, the property could be re-pegged to it's full market value. Given the housing boom we had in CA, had we just allowed government to grow with the rate of inflation, we should have been running surpluses by now, while maintaining the same level of services we had prior to Prop 13. The fact that we are now running huge deficits despite increased tax revenue and a decline in services shows just how large and inefficient we have allowed government to become.